BP reported its results for the fourth quarter and full-year 2014. Underlying replacement cost profit for the fourth quarter was $2.2 billion compared with $2.8 billion for the same period in 2013.
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Full year underlying replacement cost profit was $12.1 billion compared with $13.4 billion reported for 2013.
BP took a $3.6 billion post-tax net charge for non-operating items in the quarter, mainly relating to impairments of Upstream assets reflecting the impact of the near-term lower oil price environment, revisions to reserves and other factors. As a result, including this charge and other effects, BP reported a replacement cost loss of $969 million for the fourth quarter of 2014.
BP announced a quarterly dividend of 10 cents per ordinary share, expected to be paid in March.
BP is now taking action to respond to the likelihood of oil prices remaining low into the medium term and to rebalance its sources and uses of cash accordingly.
In 2015, BP plans to reduce exploration expenditure and postpone marginal projects in the Upstream, and not advance selected projects in the Downstream and other areas. As a result, organic capital expenditure in 2015 is expected to total around $20 billion, significantly lower than previous guidance of $24-26 billion. Total organic capital expenditure in 2014 was $22.9 billion, lower than initial guidance of $24-25 billion.
Since 2013 BP has agreed divestments with a cumulative value of $4.7 billion and continues to expect this divestment total to reach $10 billion by the end of 2015.
At the end of 2014 BP carried net debt of $22.6 billion, equivalent to a gearing level of 16.7%. BP intends to maintain gearing within its existing target range of 10-20%.
BP is continuing its work to streamline activity and increase efficiency throughout the Group. Total cash costs for the Group fell by over $1 billion in 2014 and BP is in action to deliver further efficiencies in 2015. In December 2014 BP said that it expects to incur restructuring charges totalling $1 billion over the next five quarters. The 4Q 2014 results include almost $450 million in restructuring charges, taken as a non-operating item.
BP’s Upstream segment reported underlying pre-tax replacement cost profit of $2.2 billion for the quarter compared with $3.9 billion for 4Q 2013. The result primarily reflected significantly lower oil prices than a year earlier: the dated Brent oil marker price averaged $77 a barrel in 4Q 2014 compared with $109 a barrel in 4Q 2013.
The price has so far averaged $48 a barrel in 2015. Benefits from higher underlying production and lower costs were partially offset by higher exploration write-offs. ■